Sunday, November 8, 2009

Start of November Ramblings....

Real estate in Australia has come a long way this year. By this I am inferring that a lot of soul searching has occurred amongst investors, home owners and renters alike, a lot of "is grass greener on the other side" type of thinking. Should I buy a house at these low rates? What should I do with the spare cash I have available now that rates have dropped? Should I continue paying down my PPOR, or is now the time to jump onto the investment bandwagon? 2008-2009 has indeed been a turbulent time for us all and the head scratching no doubt will continue deep into 2010 and beyond. House prices this past year all of a sudden became a mystery, mainly due to stupid doom and gloom predictions and silly hype created by the media. It seems that, in some cases, nothing has happened. The "average" 300K-500K segment has remained solid, with some growth over the period, but this is coming off a very productive 2007 and was expected anyway. Those in the upper million/s certainly felt the pinch, but the bottom end of the market remained strong and performed well. My cheapest investment for example rose 16% from when I bought it last year (roughly), whereas my most expensive made a modest/crappy 1-2%.

A lot was learned in this period too, I myself am slowly becoming more and more aware of the impact of sentiment, of confidence, and the associated mindset of watching house values and rates go up and down. But it has been one hell of a ride. For the first time in my property investment life, I felt a strange sensation, something peculiar....I think people call it stress. Now, I'm not a stressful person, in fact I am the least stressed individual I know, but the looming rate rises and my purchases earlier this year are starting to create a little bit of, dare I say it, stress. The "sleep at night factor" or SANF as we like to refer to it in the heady world of investment circles, is slowly getting worse, although, I don't really have trouble sleeping, I guess it's more that it's in my mind. My SANF, or my stress, related from property investing, has just eased a little this past week and I think I will once again lull back into my usual care-free self once again.

So, are people worried about interest rates? Am I worried about interest rates? Yeah, of course we all are, it's not very nice watching your money fly away in interest, only to see SOME of it again at tax time, but for me, it's a little bit less of a problem, for the time being.

On a bit of a side note, I wonder what the Australian market has in store in the next five years. I have now been investing for 5 years and during this time have seen, a slump after a boom, a slow mini boom and then a larger steady boom, followed by a stagnant period. I have made SOME money, not as much as I would have liked (has anyone?) and have learned a hell of a lot. What will the next 5 years bring? Will it be fortune? Will we see 50% increase in prices during this time? Will the average cost of a house in Brisbane break the 500K???? It's all possible, it's all ahead of us and most importantly, I'm in it. If you're not in it (property investing) you'll watch from the sidelines, probably complain that they're too expensive already and that you're waiting until they become cheaper. I laugh at you...I laugh at you heartily....

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